177. Why are there more ‘Dave’ than women fund managers?

8 March 2022 (pre-recorded 28 February 2022)

Staci West (SW): Welcome back to the Investing on the go podcast hosted by FundCalibre.

According to Bloomberg, just 14% of fund managers are women – a figure that has stayed the same since the year 2000. But why does this imbalance persist more than two decades later?

To mark both Careers Week here in the UK, and International Women’s Day on the 8th March, we tackle this question and more in part one of our Women’s Day special. We’ve gathered five female guests from the industry to get their views on finance as a career and diversity in fund management.

We’re joined today by Alexandra Jackson, manager of Rathbone UK Opportunities; Deirdre Cooper, co-manager of Ninety One Global Environment; Kirsty Gibson, co-manager of Baillie Gifford American; Sophia Li, co-manager of FSSA Japan Focus and Tessa Wong, product specialist on Allianz China A-Shares, hosted today by FundCalibre’s Sam Slator.

[INTERVIEW]

Sam Slator (SS): So a couple of years ago, there was a piece of research that came out from Morningstar, I think, and it basically showed that there were more fund managers named Dave than there are female fund managers. Deirdre, if you start us off, do you think that’s the case today or are more women coming through into fund management?

Deirdre Cooper (DC): Look, I think it’s still a woefully small amount. So I’m on the advisory board of an organisation called Girls Who Invest. And our mission – it’s a US based organisation, that organises internships effectively for young women in asset management, in order to build a pipeline, to explain to young women that this can be a really exciting, fulfilling career. And the mission of Girls Who Invest is to increase the percentage of the world’s capital that’s run by women to 30% by 2030. And we on the board have very regular – in fact, we just one had at our last meeting, you know, why do we do 30%? Women are, you know, half of the world’s population. Why are we going to target 30% by 2030? And the answer is that it’s sort of less than 10% today. So 30% by 2030 doesn’t feel like, you know, a sort of shabby goal. In fact, it’s probably more of a stretch goal. Having said that, do I think it’s probably a little getting better? Yeah, I think that absolutely is. I don’t know if Alex has anything to add to that.

Alexandra Jackson (AJ): Yeah. We definitely see more women coming into the sustainability area, which is really interesting, and I wonder if it’s something to do with that having, you know, a more kind of overt social purpose which perhaps is more appealing to women maybe. I do think as an industry, we’ve forgotten to kind of explain what the societal value is for the industry as a whole. And maybe that has something to do with it, you know, a hangover from kind of 2008.

Even if we get more women in through the pipeline though, we have to somehow make sure that those women want to stay, you know, during the danger years, the thirties and forties, and I still haven’t seen too many policies that kind of openly address that and have a sensible conversation about it.

SS: And Sophia, do you think that statistic is similar in Asia, or are you seeing more women coming through in the industry there?

Sophia Li (SL): I think just by looking at the statistics it’s quite in line with the evidence which I’ve sen in Hong Kong, Singapore, as well as Japan, in fact, the female fund manager ratio in both Hong Kong and Singapore is much higher than the global average, actually it’s between 20% and 30%, while I think the global average is about 14%. But on the other hand, in Japan the ratio is extremely low, which is unsurprising. It’s in line with their female manager or female executive ratio which is only less than 5%. On the other hand, for the overall investment team, the female analyst ratio is much higher, but I think overall it’s still a global phenomenon that the female fund manager ratio is still way lower than many other industries.

SS: And Kirsty, did you want to add something there?

Kirsty Gibson (KG): I think for me that the Dave stat sort of speaks to a broader point, which is that we need more diversity in general in this sector. It’s not just about women. It’s also about the fact that we’ve got, you know, in the UK anyway, we’ve had a predominance of white males who have been Oxbridge educated and it’s breaking that mould as well.

So it’s saying what we really need is diversity of thought and diversity of thought comes from different backgrounds and it comes from different socioeconomic backgrounds. It comes from different genders, it comes from different races, and that is what we really need to push for in this industry. And so I don’t think we can push for one thing in isolation to the rest. The industry needs to just be more open to this idea of diversity of thought. And if we get to that point, I just think we will have more people interested in applying for this role because it’s an extremely fulfilling career, extremely interesting career, but you need to get people over that initial hurdle of well is this the career for me?

SS: So that’s interesting, why do you think the number is so low then, given it’s such an interesting career, is fund management just not of interest to women for whatever reason? Tessa, maybe you can give us your views from a product specialist view.

Tessa Wong (TW): Sure. I guess it drives back to the nature of the role of the fund managers. Well, I am not a fund manager. I’m a product specialist, but I can see that a portfolio manager, the kind of their job is very technical. I can guess maybe for some women they may not enjoy as much as the others. They may have other priorities in life than probably they may not enjoy this role, but I think fundamentally, it doesn’t really matter to whether it’s a female or male. It’s more related to the personality that I think to be explaining of that.

SL: In general, I think I agree with Tessa that personality plays a lot of role in behind and personally, I also feel that this job needs a lot of both mental and physical resilience. Before COVID, I travelled a lot and which is physically very tired. And I think because for women, they tend to, you know, take care of the family and have more child care responsibilities. So that’s a problem. So in terms of hours and travel, but I want to point it out that having said all of this, that all of this when I try to find the reasons behind, and if I look at the difference, say between China and Japan or other Western countries, I think one reason that I can think about is that, you know, in China, the history of the financial services is relatively short, that probably implies lack of stereotypes or the lack of so-called boy club culture in which women feel kind of excluded. And usually the male superiors, maybe try to find people who look or seem like themselves. So actually when I talk to certain corporates in Japan, like the largest recruitment firm called Recruit Holdings, they clearly pointed out that’s a key problem and they try to sort it out.

DC: But I think just more broadly. And I think it’s something that I often notice. And I’m sure you guys do, as you talk to young women at universities thinking about a career in finance, I think there isn’t a great deal of understanding as to what investment management actually looks like. You know, I think that how it’s portrayed in the media is sort of people shouting into phones, telling people to buy and sell things, which is really not what it’s like. And the characterisation of the type of people that work in the industry is very sort of alpha extroverted types. Whereas in actual fact, as we know, much of our industry, you know, we’re sort of proud nerds. We spend a lot of time reading and researching and trying to understand problems. And that’s a sort of very quiet type of a task.

SS: Do you think that the pandemic has changed the opportunities for the better in terms of attracting more women or people from other backgrounds in that, if we do maintain a more flexible working structure, and meetings can be done over Zoom then the role is actually practically easier and may appeal to more women?

SL: I think flexible working hours is definitely very helpful. In fact, it is one of the key measures introduced by most of Japanese corporates to maintain and develop female talent. I think personally I feel that right now because of that, I can take advantage of fragmented time to work on certain stuff like during the evening time, etc. And of course after the pandemic, maybe people prefer go back to the office or, you know, see companies on the ground.

But on the other hand, I think it’s already become sort of like a consensus, especially in Japan, that you know, people can choose to go to office say three or four days out of seven and for large companies like Yahoo Japan, they actually now announced that they’re going to reimburse all the flight tickets for their employees, which means that they can work anywhere in the country and then go back to office only when they need them to be there.

DC: Yes, we have to travel, but to a large extent, particularly as a listed equity, rather than a private equity investor, your schedule is your own. You can work around you know, other commitments, there’s a lot of your work that that could have been done, could have been done from home. So it’s a very attractive career, you know, for someone that, that really wants to manage their life as well as their job.

KG: I’m not sure that the pandemic changes the fact that like, to the points that the other ladies have made, that one of the things that’s amazing about this job is that you can sort of geek out on certain topics and spend ages looking at things. And like you, we all probably want to get back out doing a little bit of traveling. It’s finding that balance of being able to travel, but also being able to spend time with your kids.

And I think that one of the things that I think has changed in my mind from the pandemic is just an acceptance of, I know that I am doing enough work. I know that I am doing the necessary work to do my job. And if that means that I need to go home, because I need to see my children and then I’ll just do a bit more work afterwards, then that’s what I’m going to do. I think I feel, I finally reached a point where I’m like, I’m doing what I need to do, I don’t really care if someone else thinks why she going home at this time? Because I know I’m getting my work done. And I think that that’s maybe a mindset that shifted for me.

TW: I think compared to UK and many other countries in the world, Hong Kong has the luxury of having a lot of support in the family. And it’s always a dilemma to working parents like myself, the balance between work and family, but I guess Hong Kong is a small city. My parents or my parents-in-law can come to take care of my kid. We can also hire foreign domestic helpers. So I think even before the pandemic actually I don’t see it as a very difficult situation compared to some of my friends living in the UK. They may find it more difficult because they don’t have parents in the UK to help take care of the children.

AJ: I think I’ve got this sneaking suspicion that, you know, in a year’s time, we’ll all be back 3, 4, 5 days a week in the office. And it will be led by the people for whom that is an easy ask. So I’m not convinced this is you know, a kind of an easy win. You’re right though, the evidence is there that this job can be done flexibly from home.

And what’s such a good thing about this industry is that the output isn’t, as you say, it’s not the hours that you put in, the output is the track record and the returns that you generate over the long term. And, you know, that is something I think that women can really get behind.

DC: I do think that that’s a point worth picking up because the track record point, it is an issue if you take maternity leave. And that’s a big question that I think we need to broach as an industry, you know, so for example, when men in the industry talk to me, what can I do to further diversity? I would say, well, then you, you should take paternity leave, because as soon as you get to the point where gender really doesn’t matter in terms of who’s going have that gap in the middle of their, in the middle of their career, in the middle of their track record, I think that would make a huge difference in terms of building, you know, a much broader base of female fund managers who are the actual decision makers and risk takers.

KG: I think there’s a point to that as well that, you know, I manage money as a team. And so I have taken time off on maternity leave, but it’s not affected my track record because I am a member of that team. I think that’s another way, which definitely helps open the door for anyone or everyone who needs to take leave for whatever reason, whether you be male or female, is the fact that there is no longer the necessary need to have a break in your career. It’s not a break.

I think one of the hardest things is probably managing a fund on your own. Like this job is psychologically difficult because when you’re doing well, you’re paranoid, you’re not, it’s not going to continue. And when you’re doing badly, you’re paranoid, it’s going to continue for forever. So actually, managing money as a team helps with some of the psychological challenges of actually existing in this industry as well.

AJ: I feel like you’re inside my brain! I think there is as an industry, we do seem to want to move away from the reliance on, you know, single star managers, which is super for many reasons, you know, for kind of risk management, as well as track record. I do wonder though, if, as an industry, we could just agree that, you know, even if you do run money alone, if you’re the only named manager, then you know, if you take six months out of a potentially 40 year career potentially, that does not have to cause a massive break in your performance track record, that seems quite shortsighted given, you know, we are all about the long term.

SS: We talked earlier about the personality of a fund manager being more significant than gender and one thing we’ve talking about internally has been sort of the stereotype of a woman on an investment team where it’s assumed that they are less risky, the more cautious, and they bring that sort of attitude to the team, but actually our own Juliet Schooling Latter, whose our research director, she takes the most risk out of all of our research analysts. So, how do you find that personally?

SL: In overall I think the woman, including myself probably tend to be less confident. And as a result, we probably do more research and we probably ask more questions. And unfortunately, sometimes we probably pull ourselves back rather than lean in, which is a quote from Cheryl Sandberg’s book, Lean In, and I really like it. So I, in that sense that I always encourage myself actually to be more positive and to be more confident.

TW: I also agree with Sophia that we tend to think more, we tend to think in more perspectives, not only in just one direction, we tend to think about different possibilities. So sometimes it may make people feel that we are less confident, but I sometimes I also think that it is not necessarily a bad thing to think one more step or to think one more layer. It somehow can help you to gain more conviction on the decisions that you make. So I guess this is something that is quite unique for most of the women and that is something that I think can be appreciated by investors as well.

KG: So I can’t talk for everyone, but when, when I was, you know, in my sort of late twenties, one of the challenges for me was going into a room and feeling like I deserve to be there and feeling like I could say, you know, I am one of the fund managers of this team and my voice is just as valuable as any of my other colleagues on this team. But when you go into a room that’s that that’s maybe dominated by males and you start to get doubts in your head, I guess, from that perspective. So, for me, I think confidence plays a role. I found more on the outward facing side of things. I found it more challenging, whereas within the team and within my, my firm and the people I’ve got to know, I think it’s less of a challenge.

DC: I think it’s, as Kirsty said, it’s very hard to generalise. So there may be, there probably is, just generally more imposter syndrome amongst senior women, just across industries, broadly, more feeling that I shouldn’t be in this room, even though you are probably the best, the best qualified person in the room. But it’s not, it’s not true of everyone. You know for every sort of overly humble female CEO, you have an Elizabeth Holmes. So you know, you really can’t generalise. The one thing I think I would say is that general cognitive diversity over the long term probably leads to better risk-adjusted returns.

So that just means people who think about things differently, people who are different genders, different, come from different ethnicities come from different socioeconomic backgrounds, you know, grew up in different education systems. And you bring all those people together. I think you end up in the longer term takes you a bit longer to get there. It’s probably a little bit more difficult. You end up with better decisions, which is ultimately what we’re all trying to do is make good decisions.

SL: Actually, if you look at all the research that I came across in the market, there’s only research to show that female fund managers generate better returns than the average. And there’s no research to show that the performance is the reason behind the lower female fund manager ratio. I think a maybe less confident sorry. So let me rephrase myself. Less confidence makes us maybe a more cautious investor in terms of risk controls, and that makes us more humble, which means that we don’t mind asking questions anytime until we really figure it out.

SS: And how do we, as an industry then, go out to more people and get that interest so that eventually we do have a much more diverse fund manager analyst base. What do you think’s needed?

KG: I think that broadening the pipeline thing is an interesting one as well, because I think a lot of this job, you learn on the job. So you don’t have to have a specific degree. And I mean, maybe part of the solution is saying, you know, maybe you don’t go to the career fairs and advertise to the business students and the economic students. You go to the business fairs and advertise to the biology students and the chemistry students. And through that, you often find, or that in the arts subjects, you often find that there are a greater proportion of women studying those subjects than maybe some of these other subjects. So maybe even in just the way that you target to look for a graduate applicants can actually play a role here. I don’t think that we all need to have an economics degree to be able to do this job. You know, I work with people who have a music degree and they are perfectly capable of doing this job. It really is a job that you learn so much on the job that I think that by saying upfront, you have to have one of these following degrees, you are already limiting the pool of applicants that are going to apply for your role.

AJ: You know, getting more people through the pipeline, you know, yeah, it’s about making sure people know how fulfilling and how brilliant this career can be. And you know, what it means why you would want to actually participate in this industry. I do think we’ve got a bit of a job to do there. I hear a lot of people all the time saying, you know, yes, we’ve got these big targets, but it’s really hard to fulfill them. We just don’t see the pipeline. I think that’s quite, I think that’s quite a lazy response. I think we can really widen the net. Maybe we’re just not looking hard enough. You don’t need to lower the bar in order to find more women or more diverse candidates, as Kirsty makes a great point. We can widen the net that pipeline is definitely possible to increase.

DC: One of the things that we’ve spent time thinking about is how you write job applications. So to Kirsty’s point, you know, the industry is one to generalise. It it’s mostly Oxbridge-educated, white male, and, without thinking about it, they will write a job description that is likely to attract Oxbridge-educated white males.

And there’s lots of really interesting research, you know, which we’ve probably read on women will tend to look at a job application, and if there’s two things, if there’s a list of 10 things and there’s two they don’t have they’ll think, well, maybe I shouldn’t apply. Men will say, well, I’ve just hit the first one, so clearly I can do this job.

There were words that are more likely to appeal to male candidates, words that are more likely to appeal to female candidates. And I would say, you know, every firm in the industry wants to hire more diversity. So this is when you think about making these changes, you’re definitely knocking at an open door, and the one piece of advice that I would always give people who come to me and say, you know, where am I going to get, I need great women from my team, I don’t have enough, I need to find them, is hire some great women because women want to work in diverse teams.

So if you are a highly sort of homogenous group of people, then don’t be surprised that, you know, when you interview candidates who come from a different background, whatever that may be, whether it’s ethnicity, whether it’s sexual orientation, whether it’s gender, they probably won’t want to come and work for you. Whereas if you’ve already built those diverse teams, then it’s going to be a lot easier to attract those candidates. And we really believe both in our companies, and actually in the asset management industry, that those diverse teams will do better in the future that the shape of the world is changing. Your investors, your clients, company’s customers are all going to look very, very, different in 5 and 10 years’ time than they do today. And those companies that are set up with the kind of organisations to adapt to that will thrive in that environment.

SL: So I definitely would encourage more younger generations to join this industry. But in order to do that, I think it’s really not enough. I think the overall investment management industry, as well as our clients, which are the institutions, we should also try to make improvements to help them for, because of the lack of role models, right? Female role models in the industry. I think the firms should provide more mentoring programs. I think the firms should also provide better like interns, better measures like flexible working hours, particularly in the years when women particularly need that. So in, I think more efforts have to be made actually on our side.

SW: In part two of this series we look at board diversity, the small number of female CEOs and the role of asset management to further change.